Retailers Compete For Relevance Through Experience And Experimentation

The thrill of the hunt is gone. A consumer seeking to buy something has never had more options in how to get product information and other buyers’ opinions, what channel to use, how and when they want to receive it, and who they want to buy it from. But consumers still want to enjoy shopping, and that has them gravitating to experiences. Unique, exceptional, Instagram-worthy experiences have rapidly become a win-win, giving shoppers a new thrill and retailers a fresh way to attract traffic to their stores and revenue to their bottom lines.

High-end UK retailers embraced the experience trend early and have thrived, while mid-market brands have been slower to adopt, according to Retail Gazette. But now these retailers are experimenting with new retail concepts and content to drive excitement:

• John Lewis unveiled Experience Desks, offering a wide range of activities from beauty treatments to candle-making, rooftop yoga and even a private, after-hours shopping experience.
• Debenhams is opening Sweat! in-store gyms in some stores and may add beauty services and in-store café events.
• IKEA experimented with pop-up kitchen and Christmas stores and most recently tested Friday-night-in delivery packages including IKEA food and merchandise.

Other retailers have stepped up the in-store experience through richer content, such as virtually trying products through virtual reality (VR) or augmented reality (AR), or creating branded pop-ups within their spaces where customers can invent and play with products. By adding elements to stores such as restaurants, salons, demo rooms and public spaces, and then offering classes, events and unique experiences, retailers are seeking to create deeper, more emotional connections with customers.

“As shoppers, when we have good experiences, emotions are unleashed that trigger positive buying and loyalty behaviours, which ultimately lead to revenue,” Laura Davis-Taylor, Co-Founder of HighStreet Collective, told Retail TouchPoints for its Top 5 Trends Driving Retail Innovation report. “If your brand can’t compete against Amazon’s chokehold on convenience — and most cannot — it is with this approach that retailers win.”

Consumers weigh in

According to research by the U.S. National Retail Federation, consumers are enthusiastic about experiential retail:

• 82% of shoppers who attended a retailer event in the last year say they are interested in similar events in the future.
• 60% of Gen Z prefers events by retailers they already shop, while 61% of Millennials prefer to discover new retailers through events.
• Early/exclusive access to items or a sale (87%), a party (81%) and a product demo or tutorial (80%) attract the most consumer interest among different types of events.
• 36% of those who gifted an experience said they found inspiration in a retail store.

Retail leaders need to establish organisational structures such as innovation labs but also endorse and promote idea generation across the organisation. Click To Tweet

Embracing experiential retail

But it’s not enough to simply see what works for other retailers and follow suit. Retailers that have truly succeeded in adopting a customer-centric reinvention of the brand experience follow these steps to create their own twist on experiential retail:

• Foster a culture of innovation. According to RSR, retailer “winners,” those with comparable store/channel sales growth greater than 4.5%, are much more likely than others to agree that they are more innovative than competitors (59% vs. 21%). They also acknowledge that more experimentation will help them improve their shopping experience (61% vs. 36%). Retail leaders need to establish organisational structures such as innovation labs but also endorse and promote idea generation across the organisation.
• Fail fast. Pursuing quick, small tests of new concepts can quickly make clear what ideas have legs and which do not. To make this work, the culture must tolerate and even expect failure. Clear goals and key performance indicators are essential to evaluate success.
• Seek feedback. Retailers can gain buy-in and create feedback loops to nurture and refine new ideas by fostering a community of fans who take an active interest in the brand. Peeling back the curtain creates buy-in, persuading customers to both offer suggestions and provide quick feedback on what works. Retailers can also passively collect insights on new concepts through technologies such as heat mapping, sensors and cameras.

An experiential future

Analysts are confident that experimentation and experience represent the path forward for brick-and-mortar retailers, particularly as Millennials and Gen Y bring new sensibilities to shopping. By transforming their cultures and experiences, retailers can also transform their bottom lines.

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